Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

Comments

Print   |    |  Comment

PJ/CASE LAW/2015-16/2644

Whether process of chilling of milk is BAS ?

Case:-SHARMA ICE FACTORY Vs COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I

Citation:-2015 (37) S.T.R. 660 (Tri. - Del.)

Brief Facts:- The facts leading to filing of this appeal, stay application and miscellaneous application are, in brief, as under :-
The appellant, are an ice factory providing the service of chilling of milk to M/s. Sriganganagar Zila Dugdh Utpadak Sahakari Sangh Ltd., Hanumangarh (SZDUSSL) for which they received job charges. The Department was of the view, that this activity of SZDUSSL is ‘Business Auxiliary Service’ taxable under Section 65(105)(zzb) read with 65(19)(v) of the Finance Act, 1994 as the same is “production or processing of goods not amounting to manufacture”. On this basis two show cause notices, dated 18-6-2010 for demand of service tax amounting to Rs. 11,48,674/- for the period from 12-5-2005 to 10-5-2010 and dated 30-6-2010 for demand of service tax amount to Rs. 9,89,326/- for the period from 16-6-2005 to 31-3-2010, were issued. Both show cause notices besides the demand of service tax also sought the levy of interest on the service tax under Section 75 of the Finance Act, 1994 and sought imposition of penalty on the appellant under Sections 76, 77 & 78 ibid. Both the show cause notices were adjudicated by the Additional Commissioner vide Order-in-Original No. 62-63/2011-S.T., dated 27-9-2011 by which the above mentioned two service tax demands were confirmed against the appellant along with interest and penalties were imposed on them under Sections 76 & 78. On appeal being filed to Commissioner (Appeals) against this order of the Additional Commissioner, the same was upheld vide Order-in-Appeal dated 5-6-2013. Against this order of the Commissioner (Appeals) this appeal has been filed along with stay application.
Though the matter was listed only for the hearing of the miscellaneous application filed for early hearing of the stay application, after hearing for sometime, the Bench was of the view that the appeal itself can be taken up for final disposal as only a very short issue is involved. Accordingly with the consent of both sides, the matter was heard for final disposal.

Appellant’s Contention: Sh. Sanjiv Aggarwal, C.A., the learned counsel for the appellant, pleaded that providing the facilities of the chilling of milk at its chilling plant is not covered by the definition of ‘Business Auxiliary Service’ as given in Section 65(19)(v) of the Finance Act, 1994, that while the activities of receipt, examination, testing, storage and delivery of milk have been performed by the dairy’s nominated staff, only the chilling facilities at the chilling plant has been provided by the appellant, that in these circumstances, it cannot be said that appellant has processed the milk for dairy as mere chilling of the milk would not amount to production or processing, that even if it is assumed that the appellant are carrying on any process on the milk, the activity of chilling would be the process of manufacture as per Section 2(f) of the Central Excise Act, 1944, as the milk is highly perishable in nature and shelf life of the milk is very short, and after chilling it can be transported to distant places, that in view of this the appellant`s activity cannot be treated as production or processing of goods not amounting to manufacture, that the Tribunal in the case of Mewar Foods Pvt. Ltd. v. CCE, Jaipur, reported in 2013 (32) S.T.R. 612 (CESTAT-Delhi) has held that the process of pasteurization of milk, being necessary to make it marketable to the consumers, amounts to manufacture and hence the same would not be covered by ‘Business Auxiliary Service’, that Commissioner (Appeals) in the case of M/s. Bharatpur Cold Storage Pvt. Ltd. vide order-in-appeal dated 19-7-2011 and also in the case of M/s. Shree Shakti Pharma & Ice Industries, Bayana vide order-in-appeal dated 18-10-2012 has held that activity of chilling of milk for M/s. SZDUSS Ltd. & M/s. Heinz India Pvt. Ltd. is not Business Auxiliary Service of production or processing of goods not amounting to manufacture, that in case of appellant without any reason, the Department has taken a contrary view and that in view of the above submissions, the impugned order is not sustainable.

Respondent’s Contention:- Sh. Yashpal Sharma, DR, defended the impugned order by reiterating the findings of the Commissioner.

Reasoning of Judgment:- The Ld. Tribunal have considered the submissions from both the sides and perused the records. There is no dispute about the nature of the appellant’s activity - chilling of milk to temperature below 5°Celcius for M/s. SZDUSS Ltd. No other activity like pasteurization etc. is involved. We are of the view that mere chilling of milk to temperature below 5°Celcius for the purpose of its long distance transportation, does not amount to production or processing of goods, as there is no permanent or temporary change in milk other than lowering of the temperature by the process of chilling of milk, due to which it can be transported over long distance without getting spoiled. The Apex Court in the case of Commissioner of Income Tax v. N.C. Budharaja & Co., reported in 2004-ITR-412 (S.C.) has held that word “production”, when used in juxtaposition with word “manufacture”, takes in bringing into existence new goods by a process, which may not amount to manufacture, Therefore, for “Production”, there must be some change in the raw-material subjected to process, though by that change no new product with distinct characteristics, commercial identity and usages has emerged. The process of chilling of milk to make it fit for long distance transportation without getting spoiled, which does not bring into existence any change whatsoever, would not amount to production or processing of the goods not amounting to the manufacture. We also find that earlier, the Commissioner (Appeals) on this very issue had taken view that chilling of milk is not Business Auxiliary Service covered by Section 65(19)(v) of the Finance Act, 1994. In view of this we hold that impugned order is not sustainable. The same is set aside. The appeal as well as the stay application and the application for early hearing stands disposed off.

Decision:- Appeal allowed.

Comment:-The crux of the case is that activity of chilling of milk does not amount to Business Auxiliary Service covered by Section 65(19) (v) of Finance Act, 1994. The process of chilling of milk is carried out to make it fit for long distance transportation without getting spoiled & this does not bring into existence any change. Moreover, it does not amount to production or processing of goods and hence, it is not leviable to service tax under BAS.

Prepared By:Meet Jain
 
 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com